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This Entrepreneur Says It's Time for Performance Reviews to Get a Complete Makeover Organizations need a nimble and effective Performance Management System to get the best out of their people.

By Adam Berke

Opinions expressed by Entrepreneur contributors are their own.

Adam Berke/WorkPatterns

Organizations are made up of people, not tasks, not tickets, and certainly not #channels.

So when looking to improve operational performance, why is there a tendency to start with "productivity tools" that focus on the outputs? This article is a call to action encouraging leaders to start with the inputs: people and relationships. As with many things made clear by the pandemic, our approach to performance management has needed a makeover for a long time. We just needed a catalyst to force the issue.

Performance Management vs. People Management

The traditional playbook for organizations when they hit around 50 people is to hire a Head of HR (or "People" in Silicon Valley parlance) and put a performance management system in place. The intentions are good (and in some cases legally mandated) but it's time we revisit what a Performance Management System should look like.

The Performance Management tools that we see today were built to handle performance reviews, as the name would suggest. Over time, features were layered on. Common examples of this are goal setting, surveys, and in some cases employee recognition.

The result is a product that handles a constellation of HR-mandated processes. Yet, not in a way that's natural to how organizations actually function on a day-to-day basis. That's why so few frontline employees relish going into tools passed down to them from HR. They interrupt their usual workflows and feel like a sideshow to actually getting work done.

Related: What's More Important for Your Business, Productivity or Efficiency?

This points to the second original sin of these products, the fact that they are sold exclusively into the HR function. This business model creates a fundamental disconnect between the customer (the person paying) and the end-user, i.e. managers and their direct reports. Building software is all about tradeoffs. Consider this scenario. You're headed into the end of the fiscal year which is when the majority of renewals and upsells occur. Your product team has room in their roadmap for one major feature this quarter. The decision is between building a feature that would make the product better for the end-user, or a feature requested by the decision-maker. What feature do you think wins?

Continuous Feedback vs. Annual Reviews

Even before the pandemic, organizations were moving away from formal performance reviews. Performance reviews serve a purpose, but the most nimble and innovative companies build a culture of continuous feedback. Continuous feedback is the practice of frequent and lightweight check-ins. Continuous feedback lets employees reflect in context and course-correct immediately. In six months when the specifics are a distant memory, the feedback is unhelpful at best. Data shows that continuous feedback is critical to maintaining employee engagement. This is especially true as remote/hybrid work arrangements become the norm. To embrace continuous feedback, you need tools that people are happy to use and that integrate into their daily workflows.

Need Leads to Innovation

People Management Systems help guide the day-to-day employee-manager relationship. Instead of starting with sporadic performance reviews, People Management systems start by facilitating the regularly occurring one-on-one meeting. At my company, WorkPatterns, we see that meeting as the cornerstone of the relationship and is the operational building block of an organization.

People Management Systems sit upstream of Project Management tools like Jira, Asana, Monday.com, Trello, etc. However, unlike those tools, People Management Systems also provide guided workflows for high-value management activities like giving and receiving feedback, private and public recognition, as well as lightweight goal setting to facilitate personal development and accountability.

Related: How Leaders Can Reduce Stress and Boost Productivity

The old way of doing things had two spectrums. On one end, they relied on structured performance reviews. At the other end, you had unstructured communication. This would take the form of managers "dropping by" an employee's desk or serendipitous encounters in the hallway. Neither is the right way to handle the foundational relationships that make up an organization. As with many things, the pandemic forced the point. Finding the sweet spot of continuous management will require growth, change, and new structures. People Management Systems, like WorkPatterns, are an important part of the solution. This emerging category of apps will help teams adapt and thrive as they move forward.

Adam Berke is a repeat entrepreneur, angel investor, and the CEO/co-founder of WorkPatterns, a software company focused on cultivating the habits of great leaders to help organizations around the world achieve their mission.

Prior to that, he was part of the founding team of NextRoll (formerly AdRoll) and helped grow the company from 3 to 700 employees around the world. The company was voted one of the best places to work in the San Francisco Bay Area five times.

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